Nifty 50 (18,355) and Sensex (62,020), following the bearish cues from the Asian market, opened the session with a gap down. However, both indices have recouped the loss and are trading near yesterday’s closing level.

Among the Asian majors, Nikkei 225 (30,735), ASX 200 (7,220), Hang Seng (19,240), and KOSPI (2,565) are down between 0.15 and 0.9 per cent.

Interestingly, in the domestic market, the market breadth appears positive. For instance, the advance/decline ratio stands at 31/19.

Moreover, the mid- and small-cap indices are in the green. Thus, there are positive signs here and so, the downside could be limited today. We could even see a rally today.

Among the sectors, Nifty Media is the top performer, up by 1.6 per cent whereas Nifty Metal, down by 0.4 per cent, is the weakest sectoral index.

Nifty 50 futures

Following the gap-down open in the underlying Nifty 50, the May futures began today’s session lower at 18,301 versus yesterday’s close of 18,366. But after marking a low of 18,285, the contract has recovered to the current level of 18,375.

Note that 18,375 is a resistance for Nifty futures. If this level is breached, we might see a rally to 18,470. A move beyond this level today is less likely.

On the other hand, if the contract falls off the resistance at 18,375, we could see a decline to 18,260. A break below this level can drag the contract to 18,150.

Trading strategy

Although there are bullish signs like market breadth being positive and the mid- and the small-cap indices gaining the Nifty futures are facing a strong hurdle at 18,375.

On the back of this, traders can consider going short on Nifty futures at the current level of 18,375. Add more shorts, if the contract moves up to 18,420. Place initial stop-loss at 18,475.

When the contract falls below 18,300, tighten the stop-loss to 18,360. Book profits at 18,260.

This is an intraday trade recommendation. Exit the positions just before the session closes irrespective of the price.

  • Supports: 18,260 and 18,150.
  • Resistance: 18,375 and 18,470.